Hope for Australian winemakers in China

There is cautious hope that a visit by Federal Foreign Minister Penny Wong to Beijing this week is the first step in thawing trade relations between China and Australian winemakers.

Wong met with Chinese Foreign Minister Wang Yi to mark the 50th anniversary of the establishment of diplomatic relations between Canberra and Beijing. It was the first time since 2018 an Australian foreign minister had been invited to China.

China imposed of heavy tariffs on Australian wine in late 2020, with about 800 Australia wine exporters affected.

Prime Minister Anthony Albanese said Australia was “always going to be better off when we engage in dialogue” with China.

“When we talk to each other calmly, directly and in a spirit of respect. That was the basis for establishing our diplomatic relations in 1972,” he said.

Wong added: “The prime minister has made it very clear we seek a stable relationship with China. As I have said in the past, this will take time but I do see this visit as another step in the road.

Treasury Wine Estates was one of the hardest hit by the sanctions, with a 175.6% tariff imposed on its wine.

As a result, earnings for TWE from the mainland China business fell to $2 million in the six months ended 31 December 2022, compared to $78.2 million a year earlier. 

“We remain committed to the Chinese market for the long term and appreciate that our Chinese consumers still have appetite for Penfolds and other wines in our portfolio,” Treasury Wine Estates CEO Tim Ford told the Australian Financial Review.

Ford said any move that strengthened economicties between Australia and China was to be welcomed.

“It’s been pleasing to see recent dialogue between the leaders of the two nations, and we strongly support further diplomatic and business engagement,” he said.

However, as Tahbilk owner Alister Purbrick noted to The Australian, it is a long road ahead. In the last financial year, Tahbilk saw a $1.25million reduction in its profits as a result of the impact of the Chinese restrictions.

“We are planning that we have got at least a five year, if not longer, holiday in China and the reality is that even with the best will in the world, and even with the Labor government thawing relations, for as long as China has aspirations around Taiwan I don’t think anything is going to change as far as the wine industry is concerned,” he said. 

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Categories: Business